“Blockchain” Stocks Collapse by 40% to 90%

It’s not a pretty sight.

Short sellers are in Nirvana with these creatures that had surged by hundreds or even thousands of percent in days after they announced a switch to “blockchain” in their business model or added “Blockchain” to their name. Their shares are now crashing.

I have written about a number of these outfits and their crazy share-price moves and their silly stock manipulation schemes on the way up. Now, not much later, here’s an update on how they’re doing on the way down.

UBI Blockchain International down 93% from the peak. UBIA had skyrocketed about 1,500% to $115 a share intraday by December 18, but has now – at $8.25 this morning – given up most of it.

This is a true gem. On January 9, the SEC halted trading in UBIA shares, citing two reasons: “accuracy” in UBI’s disclosures and very funny trading activity. This froze the share price at $22. The trading halt came 11 days after I’d lambasted the shenanigans by the company and its executives. On Tuesday (January 23), trading resumed – and the shares have since plunged to $8.25.

Longfin down 70% from the peak. LFIN went public in the US in November, languished at first, but suddenly soared 2,700% over three days to an intraday high of $142.82 by December 18. This briefly gave it a market capitalization of over $7 billion. LFIN has since plunged 70% to $41.61 this morning.

What caused the surge was the December 15 announcement – a mix of gobbledygook, hype, and silliness, as I called it – that it had acquired a “Blockchain-empowered solutions provider,” etc. etc. What was not in the announcement was that the acquired “assets” belonged to a Singapore corporation that is 95% owned by Longfin’s CEO and chairman. This was disclosed in the SEC filings, but no one betting on this crazy stuff reads SEC filings.

DPW Holdings down 62% from the peak. DPW, a penny-stock dotcom-crash survivor that makes lowly power supplies for computers, catapulted its shares 880% from $0.56 on November 21 to an intraday high of $5.95 on December 18, by announcing that it would market its power supplies to cryptocurrency miners. Shares have since plunged 63% to $2.19 this morning.

Long Blockchain Corp down 61% from the peak. LBCC, at the time a failing beverage-maker called Long Island Iced Tea, got its shares to rocket by 360% from $2.06 on December 18 to $9.49 a few days later by announcing that it would change its name and ticker symbol.

On January 5, after having successfully manipulated up its share price, it announced that it would sell 1,603,294 shares in a secondary offering. That day, shares crashed 21%. On January 9, under withering pressure and unwelcome scrutiny, it canceled the stock offering. Shares are now at $3.72, down 61% from the peak.

On-line Blockchain down 35% from the peak. OBC, at the time named On-line Plc, a thinly traded penny stock in London, got its shares to spike 528% the morning after it announced that it plans to change its name. “Blockchain technology and cryptocurrencies are a new and exciting area we have been working on for some time,” it said. And this worked.

In total, OBC soared by nearly 1,000% from 14 pence to 152 pence by January 9. But in the two weeks since, they’ve given up 35% and closed at 97 pence.

Riot Blockchain down 61% from the peak. RIOT was a failing biotech outfit called Biotix with annual revenues between $100,000 and $200,000 over the past four years, generating $34 million in losses over the same period. Then on October 4, it announced that it would change its name and ticker symbol and start investing in cryptocurrency and blockchain startups.

A few days before the announcement, shares were trading at about $4.50. By December 19, they’d soared nearly 1,000% to $46.20. Since then they have crashed 61% to $17.92.

Eastman Kodak down 23% from the peak. KODK, one of the late entries into this blockchain-and-crypto stock manipulation scheme, announced on January 9 a “blockchain initiative,” including its own cryptocurrency, KodakCoin. The stock jumped 300% in two days, from $3.10 to $12.40. Amusingly, on January 8, the day before the announcement, seven independent directors awarded themselves huge stock grants. Shares have dropped 23% from the peak to $9.50.

Seven Stars Cloud Group down 40% from the peak. SSC, a Chinese video-on-demand service outfit that is traded on the Nasdaq, got its shares to spike 200% from $2.33 on December 8 to $7.00 intraday on December 26, by announcing that it took a 27% stake in The Delaware Board of Trade Holdings, a private company. Seven Starts claimed that DBOT’s Alternative Trading System is “the first and only blockchain based Alternative Trading System fully licensed by the SEC.” Shares have since plunged 40% to $4.13.

Siebert Financial Corp down 54% from the peak. The small 50-year-old New York brokerage announced on December 14 that it would expand into cryptocurrency trading. Its shares soared nearly 400%, from $4.40 to $21.64 by December 21. And that was it. Including today’s double-digit plunge, they’ve plummeted 54% from the peak, to $9.65 this morning.

There are dozens of other outfits like these out there, some of them small companies, hanging on by their fingernails, that are trying to spike their share price; others are China-based US-traded fly-by-nights; some are near-zombies going for a Hail Mary pass.

For speculators that were able to get into and out of these scams in time, it worked. A 1,000% gain obtained in a few days by hook or crook is nothing to sneeze at. But it’s ending in tears for those who got into these scams too late and whose despised fiat currency just ended up providing the exit grease for early speculators. And short sellers, the lucky ones that got the timing right, are laughing all the way to the hated legacy banks.

But not all will get the timing right. Short sellers, when they want to take profits, have to buy their shares back in order to cover their short position, and many of the stocks are thinly traded, and covering a big short position can cause shares to bounce violently. So there will be some serious snap-backs, which might take the fun out of shorting these stocks.

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67 comments for ““Blockchain” Stocks Collapse by 40% to 90%”

It would take a heart of stone to see all these Bitcoin bubble-chasers get their heads handed to them, and not laugh.

BTilles

Jan 25, 2018 at 7:37 pm

A tulip by any other name…

Nick Kelly

Jan 25, 2018 at 8:10 pm

RE: all the talk (appropriate) about the great tulip bulb mania, as a trivia guy I do have to add that tulips EVENTUALLY paid off.
Most years Holland exports about 2 billion bulbs worth about 250 million euros.
Of course a lot of hard work is required.

I doubt that BC or block chain will end as well. It might however force money transfer costs down if it actually becomes a common method of doing so.

Petunia

Jan 26, 2018 at 10:58 am

The blockchain is too slow to compete with current payment systems. The blockchain is a smoke screen to make the concept of no recourse transactions the standard.

If by eventually you mean about 300 years then okay. According to wikipedia in Feb. 1637 a single bulb sold for ten times an annual workers salary. Or a single Semper Augustus bulb sold for 12 acres of arable land around the same period.

Corbin Dallas

Jan 26, 2018 at 2:14 pm

You should check out reddit’s buttcoin community. All it is is people laughing at bitcoin “investors”…

alex in san jose AKA digital Detroit

Jan 25, 2018 at 5:30 pm

But I don’t get it! I bought Pets.com! I was told it was a sure thing because it has .com in the name!

Bobber

Jan 25, 2018 at 7:53 pm

Why can’t the Fed bail out these people? This is an outrage.

The Fed MUST print some more dollars and buy their stocks from them at last month’s price. What is the point of having a federal reserve bank if they aren’t going to bail people out?

They have bought plenty of 3% down mortgages for God’s sake. Why not buy some block chain stocks too.

timbers

Jan 25, 2018 at 8:04 pm

I want the Fed to buy the Timbers Bimbers Reverse Inverse Libor Swap Partial Put Call Index Blockchain Hedge Fund at full issue price. If the Timbers Bimbers Fund goes down the world goes down.

Duke de Guise

Jan 25, 2018 at 11:02 pm

I’m all in, baby.

andy

Jan 25, 2018 at 11:20 pm

Knew it.

Junglejim

Jan 25, 2018 at 8:18 pm

Bobber, please remember to add the suffix “/sarc” to your remarks. Without that it is hard to be certain. Sarcasm and fake news these days are so similar. Remember, the criminally bewildered and political operatives are all around us.

/sarc

Night-Train

Jan 25, 2018 at 11:53 pm

Isn’t it such a sign of the times that at any other time what would readily be seen as sarcasm, and very good Sarc at that, needs to be disclosed for the reader.

So this is what it looks like on the other side of the looking glass. Maybe I should re-brand that as Looking Glass Blockchain Solutions and Video Rental.

Carry on. There is much work to do.

Javert Chip

Jan 27, 2018 at 12:22 pm

…needs to be disclosed to the reader…

Assuming the sarcasm need to be “disclosed to the reader”, it’s probably the same tiny cohort of delicate readers who invest in this stuff.

But then, I suspect junglejim was being sarcastic when he suggested disclosure.

Maximus Minimus

Jan 25, 2018 at 9:25 pm

The FED competes with these zombies on intellectual as well as practical level. Why would the FED bail them out? Makes no sense.

Bobber

Jan 26, 2018 at 12:07 pm

Maximus, you have to think about fairness.

It is pure discrimination for the Fed to favor one asset class over another. All asset holders should have equal right to helicopter wealth, to ensure fairness and integrity in the system.

I think its OK to exclude the working class from the freebies. They need continued incentives to work. If working people are given freebies, they may not work as hard and the entire system shuts down.

Maximus Minimus

Jan 26, 2018 at 12:36 pm

Agree with you. The incentives to actually do any meaningful work has gone, thank you central bank(s)ters. I am skeptical of cryptos, but I have a soft spot for those who do it, and so show these quacks the finger.

Javert Chip

Jan 27, 2018 at 12:38 pm

For the vast majority of Americans, the incentive & rewards of work are still strong. A tiny, but vocal, minority still enjoy parental support (aka disincentives to work) long after what used to be considered the onset of “adultism”.

Silly Me

Jan 26, 2018 at 5:32 am

Blockchain prices have been obviously manipulated by parties with virtually unlimited financial resources. Can you think of one? If true, the technology might be an anti-inflationary strategy so that the crooks can print more fiat money.

The smart crooks steal crypto .You don’t need a big bag to haul your illgoten loot.
Why: You can hide it on your person with a minimum amount of pain.

Silly Me

Jan 27, 2018 at 7:36 am

My impression is that the thieves are either the creators or the distributors, probably both.

roddy6667

Jan 27, 2018 at 9:43 am

I believe that that people who own the exchanges are the same people “hacking” them. Plausible deniability and all that.
Help! We got hacked! Call the police! (snicker)

KPL

Jan 26, 2018 at 1:58 pm

They forgot to become a bank! Only banksters can dip into the central banksters’ till at will. After all central banksters have a job to do – save the world.

TMS HAWAII

Jan 25, 2018 at 7:59 pm

The sickening saga of KODK is particularly egregious. Given the timing of the stock options awarded to KODAK’s Board members, the fact that the SEC hasn’t opened an investigation is proof enough that the SEC is totally captured and utterly useless.

andy

Jan 25, 2018 at 10:18 pm

I agree, SEC must be replaced with a better one, we need some masters degrees here.

Gershon

Jan 26, 2018 at 1:01 am

In “The Big Short,” the true story of a small group of contrarian investors who bet against the unsustainable Housing Bubble 1.0, there’s a telling scene where the female regulator is literally sleeping with the Goldman Sachs banker she is supposed to be overseeing, in hopes of landing a job with the firm. That scene sums up the relationship between our captured, corrupt regulators and Wall Street better than a thousand editorials.

Rusty Brown in Canada

Jan 28, 2018 at 12:09 am

“Life imitates art”.
[Oscar Wilde]

Ricardo

Jan 25, 2018 at 8:15 pm

Ian Drury and the Blockheads…… “Hit Me With Your Rhyhm Stick” ……. still a hit after all these years ……. hit me, hit me, hit me.

Lou Mannheim

Jan 25, 2018 at 9:30 pm

That’s a great song!

R cohn

Jan 25, 2018 at 8:51 pm

I tried to sell Riot short but could not borrow the stock
Same thing with Gbtc

MC01

Jan 26, 2018 at 4:08 am

I think there are about one million RIOT shares around. Average daily volume in the past 50 days (NASDAQ metric) is 7,200,000 and then some, so I am not exactly suprised you could not find any share to borrow: while the volume is not exactly small it’s a rather crowded trade. You should find plenty right now however, as yesterday the floodgate really opened.

GBTC is different: there are only 25,000 shares around and everybody seems to want them right now. There was a window of opportunity yesterday which lasted about a couple of hours but it was quickly closed.
Unless you are both very patient and very lucky, borrowing GBTC may prove a chore.

I think there will be plenty of room to short these things over the coming months as they zig-zag their way down (remember: these things never go to the Avichi in a straight line) so there may be still several occasions.

Night-Train

Jan 26, 2018 at 12:02 am

Is there any money in solar powered cryptocurrency miners, or has someone else already grabbed that? I am glad Wolf and the readers here delved deeply into this cryptocurrency phenomenon. It has been illuminating to one who has not followed it closely.

Winston

Jan 26, 2018 at 10:29 am

“Is there any money in solar powered cryptocurrency miners”

With bitcoin whose blockchain has grown so large that takes days to download it and whose transaction fees have grown so large that merchants are beginning to abandon it, a personal nuclear power station would be more appropriate considering the computational power now required to mine them.

BTW, this cryptocurrency mining mania has resulted in the more powerful PC graphics cards used to mine them to double or more in price from their suggested retail prices. NVIDIA, one of the two major graphics card producers has asked retailers to limit card purchases to two per buyer although that won’t stop anything because buyers will simply buy from multiple merchants when they can actually FIND cards in stock to buy. A more effective move by NVIDIA is their selling directly at their suggested retail prices.

Why is NVIDIA doing this? Because when this cryptocurrency mania crashes along with the mining of them because it eventually costs more in electricity to mine them than they’re “worth”, there will be VAST quantities of used NVIDIA (and AMD) graphics cards flooding the market by miners desperate to sell them, totally destroying the new card market.

MC01

Jan 26, 2018 at 11:00 am

The Kurchatov Institute is presently working on a small (68 kWe) pressurized water reactor called Elena which they are pitching for applications such as providing power to small towns (up to 2000 souls) in remote locations and to desalinization plants. It’s mostly based around Soviet and Russian work on satellite-based reactors such as TOPAZ.
I bet if the Kurchatov Institute started pitching it for cryptocurrency applications they’d have turn away people looking to “invest” into it.

Nvidia is now partially owned by our old friend, SoftBank, the Japanese buyout queen whose junk rating and crushing debt load the financial press is wont to ignore. With the heart of the blockchain craze firmly in Eastern Asia (and today yet another Japanese exchange was “hacked”… ), it’s hard not to see a correlation.

Petunia

Jan 26, 2018 at 11:05 am

The prices of used graphic cards have doubled, for the high end cards, from the original prices. There is a huge demand on resale sites.

Collapsar

Jan 26, 2018 at 12:23 pm

After selling two high end Nvidia cards for about half of what I paid for them, I found out a few weeks later that the same model of used cards were selling for more than what I paid for them new. My impeccable timing at work again.

Maximus Minimus

Jan 26, 2018 at 12:20 pm

I was wondering why graphic card prices has gone far above motherboard+cpu prices. And that was before the crypto craze, so it was completely driven by the demographics that is hooked on online gaming. And that cyber mentality has now morphed into crypto mentality.
Presumably, video cards are used because GPUs are more powerful than CPUs, now? Still you need a robust power supply.

fajensen

Jan 29, 2018 at 12:18 pm

Machine Intelligence / Machine Learning software uses graphics cards a lot – a decent graphics card has maybe 1024 “compute nodes” all running in parallel, whereas the CPU has maybe 16 cores for the largest Xeon or i7 CPU’s – which are slower for these applications and costs about twice the price of decent graphics card .

The machine learning tools Caffee, Theanos and Keras all use GPU’s and are getting popular because they are very powerful while fairly easy to use (the last two runs directly from Python).

Collapsar

Jan 26, 2018 at 12:37 pm

I wonder if many of the miners are overclocking these cards, and if so are they upgrading the cooling for them. If not, when the whole thing comes crashing down the second hand market could end up flooded with cards that were run outside of their thermal design points and are on their last legs. This could end up killing the market for used cards, too.

Petunia

Jan 27, 2018 at 11:45 am

They do overclock the cards and they do upgrade the cooling systems. Stay away from the cooling systems with liquid in them, they break and destroy your computer.

Gershon

Jan 26, 2018 at 1:08 am

The existence of rival counterfeiters is an affront to the Federal Reserve, who one fine day will ensure that their oligarch cohorts direct their Republicrat duopoly political puppets to shut down these scam funny money operations. The Fed and its central banker cohorts want that racket all to themselves.

Mugsy777

Feb 5, 2018 at 1:51 pm

Ironic…..counterfeiters counterfeiting counterfeiters…..bitcoin is a a great harbinger of central bank currency’s future.

roddy6667

Jan 26, 2018 at 2:04 am

Who could have predicted this?

Do I really need the /sarc tag?

Bruce

Jan 26, 2018 at 5:34 am

Gotta admit, Wolf, your post about putting together your own “blockchain stock” and the perfect timing of this story are some of the best humor I have experienced in a long time.

I smell a Pulitzer…

Professorai

Jan 26, 2018 at 7:52 am

There has to be real capital value behind an ownable share, like real capital, sovereign, human, or intellectual capital, or even perennial-entertainment, before blockchain can replace human brokers, registrars or transfer-agents. Those poor Bitcoin miners waiting for inflation to cover their electric bills…

blockchain bob

Jan 26, 2018 at 8:44 am

blockchain is here to stay, just as dot.com was. What’s going on is the wheat being separated from the chaff.

Kent

Jan 26, 2018 at 9:17 am

3D printers are here to stay too.

Enrique

Jan 26, 2018 at 9:19 am

I completely agree with this. However the eventual form with which blockchain (or something analogous) goes forward is surely beyond any possibility of knowing at this point.

I would guess that – like the internet as a whole – it will be utterly crapified and made a tool of the agents of mass crapification (governments, big tech, etc.)

Thus all the libertarian dreamers of this being a hedge against Orwellianism will surely end up disappointed. I hate predicting things but this is sadly inevitable, I think.

Winston

Jan 26, 2018 at 10:36 am

Blockchain technology -IS- very useful, it’s just the cryptocurrencies which are just one example of the uses of that technology that I laugh at. Talk about a textbook example of a “find a greater fool” speculative bubble…

Maximus Minimus

Jan 26, 2018 at 5:32 pm

However, all the technological pieces of blockchain have been sitting around, used independently, or envisioned, but it took the hype of cryptos – and chiefly the central banking trashing of the economy, and ensuing currency debasement – to realize the potential of it.

Javert Chip

Jan 27, 2018 at 12:53 pm

Said another way: If you go to a crypto event and don’t see any sheep, YOU are the sheep

This just confuses Bitcoin with Blockchain and they are not the same thing.

MASTER OF UNIVERSE

Jan 26, 2018 at 1:11 pm

Now is a great time to btfd because the pump n’ dump ain’t over till the Fat Lady sings, and the Fat Lady has not arrived at the gig yet unless Wolf is the Fat Lady which would be pretty weird if he was.

:)

MOU

Beast

Jan 26, 2018 at 2:39 pm

I killed it on the way up. Took profits and got out. Still checking my daily data. Methinks giant bounce on the way, at least with RIOT short squeeze. Once more chance to rage before it’s over. No dog in this hunt, just my .02.

The thing is all those stocks are still higher than when they first changed their names or whatever. So it’s a net positive. Yeah they went down 30-80% but they rose way beyond that to begin with. So again, NET POSITIVE.

Javert Chip

Jan 27, 2018 at 2:18 pm

Jon

The difference between school and life: life first gives the test, then you get the lesson.

Your comment was accurate but highly misleading, and you are silent on the rapid & ongoing price decline. With the exception of KODK and (possibly) LFIN, these are tiny tiny companies (UBIA has 18 full-time employees) with tiny tiny market caps (DPW, 24 full-time-employees, $44.5M market cap) – a stock-manipulator’s dream.

Generally, investors (as opposed to speculators) tend to understand and see long-term value in company performance (years); speculators see short-term (days, months) opportunity in stock movement (independent of underlying company performance).

Speculators definitely & legally make huge amounts of money trading against other greedy, less informed, unsophisticated speculators, but it’s basically a gambling game of finding the greater fool. As frequently occurs, this environment is also ripe for manipulation.

MD

Jan 26, 2018 at 5:12 pm

The unprecedented amounts of speculative cash washing around the world need new bubbles to blow.

Meanwhile, in other news, the potholes in the roads get bigger.

MASTER OF UNIVERSE

Jan 26, 2018 at 7:10 pm

I live in the coldest capital city [Ottawa] in the entire world, and our pothole numbers are around 10,000 per winter. Our Mayor is sinking all the infrastructure money into Light Rail Transit instead of paving the roads, and the maintenance deficits are piling up.

Our potholes are world class.

MOU

Duke de Guise

Jan 27, 2018 at 11:25 am

You guys are so analog!

Your obsession with “potholes” and other non-digital, meat-world concerns just shows how out of touch you are with the Brave New Crypto World.

Now go stand in the corner and drink Soylent until you’ve learned your lesson and earned the right re-join the chorus!

MASTER OF UNIVERSE

Jan 27, 2018 at 1:37 pm

Mea Culpa!

I will try to reform myself, sir.

MOU

raxadian

Jan 26, 2018 at 5:49 pm

More and more tech that’s online is being infected with malware just to mine coins. From ads to apps, to just plain malicious code that can help your cell phone battery to explode while it mines non stop.

So yeah Blockchains have gotten really annoying.

intosh

Jan 28, 2018 at 4:19 pm

This is the new casino, more exciting than the brick-and-mortar ones and as “rigged” as Wall Street: